A factory building owned by Amber, Inc is destroyed by a hurricane. The adjusted basis of the building was $400,000 and the appraised value was $425,000 . Amber receives insurance proceeds of $390,000 . A factory building is constructed during the nine-month period after the hurricane at a cost of $450,000 . What is the recognized gain or loss and what is the basis of the new factory building?
a. $0 and $450,000.
b. $0 and $460,000.
c. ($10,000) and $440,000.
d. ($10,000) and $450,000.
e. None of the above.
d
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